KCG 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

KCG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS⁽¹⁾

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
	(In thousands, except per share amounts)
Revenues
Trading revenues, net	$	230,471		$	92,556		$	415,495		$	333,737
Commissions and fees		109,079			25,542			164,391			79,487
Interest, net		(177	)		(781	)		(970	)		(1,998	)
Investment income and other, net		128,446			13,285			119,207			14,015
Total revenues		467,819			130,602			698,123			425,241
Expenses
Employee compensation and benefits		129,631			31,875			236,983			111,395
Execution and clearance fees		81,023			42,267			167,931			144,656
Communications and data processing		44,046			21,681			86,040			67,380
Interest		23,870			706			26,515			2,002
Depreciation and amortization		20,091			7,574			36,004			27,180
Payments for order flow		16,431			717			17,468			2,128
Professional fees		9,077			2,575			38,928			7,690
Occupancy and equipment rentals		8,898			3,240			15,454			8,865
Business development		2,644			6			2,686			19
Writedown of assets and lease loss accrual		936			—			4,248			—
Other		11,318			5,349			30,028			19,002
Total expenses		347,965			115,990			662,285			390,317
Income from continuing operations before income taxes		119,854			14,612			35,838			34,924
Income tax (benefit) expense		(107,767	)		4,805			(102,478	)		10,368
Income from continuing operations, net of tax		227,621			9,807			138,316			24,556
Loss from discontinued operations, net of tax		(784	)		—			(784	)		—
Net income	$	226,837		$	9,807		$	137,532		$	24,556
Basic earnings per share from continuing operations	$	1.99		$	0.21		$	2.02		$	0.49
Diluted earnings per share from continuing operations	$	1.98		$	0.21		$	2.01		$	0.49
Basic loss per share from discontinued operations	$	(0.01	)		—		$	(0.01	)		—
Diluted loss per share from discontinued operations	$	(0.01	)		—		$	(0.01	)		—
Basic earnings per share	$	1.99		$	0.21		$	2.00		$	0.49
Diluted earnings per share	$	1.98		$	0.21		$	2.00		$	0.49
Shares used in computation of basic earnings (loss) per share		114,113			46,411			68,632			49,619
Shares used in computation of diluted earnings (loss) per share		114,773			46,411			68,855			49,619

(1) Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC. Certain reclassifications have been made to the prior periods Consolidated Statements of Operations to conform to current presentation.

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KCG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	September 30, 2013			December  31, 2012(1)
				(Restated)
	(In thousands)
ASSETS
Cash and cash equivalents	$	798,712		$	427,631
Cash and securities segregated under federal and other regulations		216,442			—
Financial instruments owned, at fair value:
Equities		2,156,466			378,933
Listed options		288,227			92,305
Debt securities		79,284			183,637
Total financial instruments owned, at fair value		2,523,977			654,875
Collateralized agreements:
Securities borrowed		1,370,921			52,261
Receivable from brokers, dealers and clearing organizations		1,330,113			142,969
Fixed assets and leasehold improvements, less accumulated depreciation and amortization		161,865			83,341
Investments		125,889			248,438
Goodwill		18,398			4,645
Intangible assets, less accumulated amortization		192,045			46,123
Deferred tax asset		169,619			4,180
Assets within discontinued operations		6,098,299			—
Other assets		287,015			23,073
Total assets	$	13,293,295		$	1,687,536
LIABILITIES, REDEEMABLE PREFERRED MEMBER’S EQUITY AND EQUITY
Liabilities
Financial instruments sold, not yet purchased, at fair value:
Equities	$	1,848,728		$	423,740
Listed options		229,722			69,757
Debt securities		79,057			19,056
Other financial instruments		5,431			—
Total financial instruments sold, not yet purchased, at fair value		2,162,938			512,553
Collateralized financings:
Securities loaned		543,451			—
Financial instruments sold under agreements to repurchase		595,029			—
Total collateralized financings		1,138,480			—
Payable to brokers, dealers and clearing organizations		666,178			24,185
Payable to customers		486,136			—
Accrued compensation expense		130,158			27,728
Accrued expenses and other liabilities		220,648			118,068
Capital lease obligations		12,453			24,191
Liabilities within discontinued operations		6,006,024			—
Short-term debt		235,000			—
Long-term debt		722,259			15,000
Total liabilities		11,780,274			721,725
Redeemable preferred member’s equity		—			311,139
Equity
Members' equity		—			654,672
Class A common stock		1,235			—
Additional paid-in capital		1,299,907			—
Retained earnings		226,837			—
Treasury stock, at cost		(9,811	)		—
Accumulated other comprehensive loss		(5,147	)		—
Total equity		1,513,021			654,672
Total liabilities, redeemable preferred member’s equity and equity	$	13,293,295		$	1,687,536

(1) GETCO Holding Company, LLC. Certain reclassifications have been made to the prior period Consolidated Statement of Financial Condition to conform to current presentation.

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KCG HOLDINGS, INC.

PRE-TAX EARNINGS FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*

(In thousands)

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
Market Making
Revenues	$	240,110		$	107,672		$	455,678		$	383,203
Expenses		192,257			99,458			400,070			345,227
Pre-tax earnings		47,853			8,214			55,608			37,976
Global Execution Services
Revenues		91,366			9,258			113,701			27,248
Expenses		107,720			10,378			134,949			31,087
Pre-tax loss		(16,354	)		(1,120	)		(21,248	)		(3,839	)
Corporate and Other
Revenues		136,343			13,672			128,744			14,790
Expenses		47,988			6,154			127,266			14,003
Pre-tax earnings		88,355			7,518			1,478			787
Consolidated
Revenues		467,819			130,602			698,123			425,241
Expenses		347,965			115,990			662,285			390,317
Pre-tax earnings	$	119,854		$	14,612		$	35,838		$	34,924

 * Totals may not add due to rounding.

Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC.

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KCG HOLDINGS, INC.

Regulation G Reconciliation of Non-GAAP financial measures (Continuing operations)⁽¹⁾

(in thousands)

Three months ended September 30, 2013	Market Making		Global Execution Services			Corporate and Other			Consolidated
Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:
GAAP Income (Loss) from continuing operations before income taxes	$	47,853	$	(16,354	)	$	88,355		$	119,854
Gain on investment in Knight Capital Group, Inc.		—		—			(127,972	)		(127,972	)
Compensation and other expenses related to reduction in workforce		2,309		15,132			—			17,441
Professional and other fees related to Mergers and August 1st technology issue		—		—			7,269			7,269
Writedown of assets and lease loss accrual		108		—			828			936
Non GAAP Income (Loss) from continuing operations before income taxes	$	50,270	$	(1,222	)	$	(31,520	)	$	17,528
Nine months ended September 30, 2013	Market Making		Global Execution Services			Corporate and Other			Consolidated
Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:
GAAP Income (Loss) from continuing operations before income taxes	$	55,608	$	(21,248	)	$	1,478		$	35,838
Gain on investment in Knight Capital Group, Inc.		—		—			(127,972	)		(127,972	)
Professional and other fees related to Mergers and August 1st technology issue		—		—			44,398			44,398
Compensation and other expenses related to reduction in workforce		6,264		15,997			—			22,261
Unit acceleration due to Mergers		—		—			22,031			22,031
Strategic asset impairment		—		—			9,184			9,184
Writedown of assets and lease loss accrual		108		—			4,525			4,633
Non GAAP Income (Loss) from continuing operations before income taxes	$	61,980	$	(5,251	)	$	(46,356	)	$	10,373

 * Totals may not add due to rounding

(1) Third quarter 2013 includes the results of KCG Holdings, Inc. Year to date 2013 includes three months of results of KCG Holdings, Inc. plus six months of GETCO Holding Company, LLC. All of 2012 reflect the results of GETCO Holding Company, LLC.

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KCG HOLDINGS, INC.

Regulation G Reconciliation of Non-GAAP financial measures (Continuing operations)

(in thousands)

Three months ended September 30, 2012	Market Making		Global Execution Services			Corporate and Other			Consolidated
Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:
GAAP Income (Loss) from continuing operations before income taxes	$	8,214	$	(1,120	)	$	7,518		$	14,612
Investment gain		—		—			(11,354	)		(11,354	)
Non GAAP Income (Loss) from continuing operations before income taxes	$	8,214	$	(1,120	)	$	(3,836	)	$	3,258
Nine months ended September 30, 2012	Market Making		Global Execution Services			Corporate and Other			Consolidated
Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:
GAAP Income (Loss) from continuing operations before income taxes	$	37,976	$	(3,839	)	$	787		$	34,924
Investment gain		—		—			(11,354	)		(11,354	)
Non GAAP Income (Loss) from continuing operations before income taxes	$	37,976	$	(3,839	)	$	(10,567	)	$	23,570

 * Totals may not add due to rounding

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